Homeowners Insurance: is coverage that protects the insured’s privately owned home. There are many different types of homeowners insurance that cover a broad spectrum of possible events and occurrences, but the primary purpose of homeowners insurance is to protect residents of the household and the house itself against a large variety of potential perils including, fire, personal liability, theft, etc.

Example: John and Susie have recently purchased their first home. Due to faulty wiring behind their electric stove, a fire broke out inside the walls of the house and burnt the structure to the ground. Had they not had homeowners insurance, they would be stuck with the re-building costs to restore their home solely out of their own pockets.